Commercial Real Estate - Starting To Crack?
Commercial real estate could soon make big trouble for the market. It’s been linked to a string of negative developments and now REITs are tumbling.
Shares of Boston Properties closed significantly lower on Tuesday as did Simon Property Group as well as the iShares Dow Jones US Real Estate ETF which tracks the sector.
The moves come after Goldman Sachs blamed commercial real estate as a major factor for their most recent losses. And those losses could be mounting.
Data released a few days back by real estate research firm Reis shows vacancies have soared at malls all around the nation. As a result asking rents dropped to $19.44 per square, down 0.6 percent, the largest single-quarter decline on Reis' records.
If you watch Fast Money regularly you know Karen Finerman has been concerned about this trend. Apparently Deutsche bank is too. They estimate further price declines in commercial real estate could be as much as 45%!
How is Finerman trading it?
I’m short commercial real estate across the board, she says. I still think there’s room to go to the downside. I'd shortEssex Property, Regency Centers, or Brookfield Properties .
Or you can look at Acuity Brands , says Guy Adami. (They're a maker of light fixtures for commercial properties) If it gets up to $28 I’d get short.
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Trader disclosure: On Apr 14th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (BX), (EEM), (FXI), (F), (PBR), (CSCO), (FDX), (TCK), (SWC); Syemour's Firm Owns (RIG); Terranova Owns (X), (KCE), (AMGN), (DELL), (IBM), (BP), (BRCM), (POT); Terranova Owns (DIS) Calls, (COP) Calls, (HES) Calls, (JPM) & (JPM) Calls, (INTC) & (INTC) Calls, (XOM) & (XOM) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (AXP), (CSCO), (MSFT), (RIG); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Owns (BIIB) Call Spread; Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Is Short (MDY), (SPY), (USO), (BAC), (WFC), (BPO), (ERG); Finerman's Firm Is Short (MDY), (SPY), (USO), (BAC), (WFC), (BPO), (ERG)